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3 ways a home equity loan could improve your life
By Jackie Lam
Published on April 10, 2023
Read time: 2 min
After my friend bought a house in LA, she took out a home equity loan. What did she use the stash of cash for? To pay off her credit cards.
With a home equity loan, you can borrow against the equity you have in your property. Equity is your home’s value minus the amount you still owe on your mortgage. You can use a home equity loan just about any way you want to.
Here are some ways a home equity loan can improve your life.
#1: Use it to pay off your credit cards
Carrying large balances on one or more credit cards? You could consolidate them with a home equity loan. Home equity loans typically have much lower interest rates than credit cards, so you could save on interest charges.
Besides the big advantage of saving you money, rolling your debts into a new, single loan could also simplify your finances. Multiple payments become one. And the monthly payment on a home equity loan could be lower than the total that you were paying on all your smaller debts, releasing the pressure valve on your budget and leaving you with more cash in your pocket each month.
#2: Make some home repairs
Don't put it off any longer. Boost your home's value and make it a more pleasant place to live by giving it the upgrade it so deserves. Here are some other ways home improvements can enhance your life:
Enjoy tax benefits (if you use the money to improve your home, your home equity loan interest might be tax deductible)
Turn visions of your ideal home into a reality
Take the time you need to pay off big ticket home improvement expenses
#3: Buy now, pay later
Get the things you need now, with time to pay them off later. Home equity loans have a longer repayment period compared to personal loans, and that could help you get a lower payment that’s friendly on your budget.
A home equity loan gives you a lump sum of money, and a home equity line of credit lets you borrow as needed up to your credit limit. Either way, you can get the amount you need now, with a manageable monthly installment to pay it back.
That means you can plan out your payments—and your financial life at large.
Bonus #4: [Fill in the blank]
A home equity loan could boost your life happiness quotient in many ways, and happiness doesn’t always look the same. Maybe what would improve your life right now is to pay off medical bills, or cover an unexpected financial emergency. Maybe you’d like to pay for your child’s wedding. The best way to use a home equity loan is the way that helps you the most.
What’s your financial goal?